Author

Mr. Dhruv Khator

12 Jan, 2026 | 10 min Read

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Insights of the Report

  • Global steel demand is structurally slowing, with growth limited to ~0.7% CAGR through 2030 as mature markets stagnate.
  • Growth is shifting decisively toward emerging markets, with India leading global demand expansion while China’s consumption declines.
  • The global steel market remains large but margin-constrained, valued at ~US$1.5 trillion today and approaching ~US$1.9 trillion by 2030.
  • India is the key growth engine, targeting expansion from ~200 MT to 300 MT steel capacity by 2030, supported by infrastructure and manufacturing growth.
  • Profitability has normalized after the post-pandemic cycle, reinforcing steel’s position as a structurally low-margin, capital-intensive industry.
  • Decarbonization is now a strategic necessity, as steel contributes ~7–8% of global CO₂ emissions and faces rising regulatory and customer pressure.
  • Technology is reshaping competitiveness, with rapid adoption of EAFs, digital manufacturing, and specialty steel driving efficiency and differentiation.
  • Oversupply, trade barriers, and raw-material constraints remain the biggest risks, requiring disciplined investment and strategic capacity planning
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Executive Summary

The global steel industry has slowed down after years of expansion, and the pace of growth is now far more modest. Over the next several years, steel consumption is expected to stay almost flat, with long-term growth averaging below 1% a year through 2030. Much of this shift can be traced back to China’s prolonged real estate slump, which has dampened construction activity and reduced demand for steel. At the same time, emerging markets especially India are becoming the main source of new demand. Even so, the industry as a whole continues to wrestle with oversupply, weaker pricing power, and an increasingly complex web of trade policies and import restrictions.

India stands out as the clear bright spot. Now the world’s second-largest steel producer and consumer, it’s expected to post annual demand growth in the range of 6–9% through the end of the decade. That momentum is being driven by big-ticket public infrastructure projects, rapid urban housing development, transportation and logistics expansion, renewable energy build-outs, and a broad push in domestic manufacturing. To meet this rising demand, India plans to expand its total steelmaking capacity from roughly 200 million tonnes today to about 300 million tonnes by 2030, an enormous jump that will require a mix of private investment, government incentives, and capacity upgrades across existing plants.

On the financial side, the industry has returned to a more typical profitability range after the post-pandemic boom. Margins are tighter, but most companies have strengthened their balance sheets and continue to invest heavily in efficiency improvements, capacity additions, and cleaner production technologies. The years ahead will test how well producers can operate under pressure balancing cost discipline, technology adoption, and sustainability goals. Those that move early on digital integration, value-added product lines, and low-carbon steelmaking are likely to come out stronger, while slower players may find it increasingly difficult to compete.

Industry Dynamics

The global steel industry remains stuck in an oversupply loop. Around 165 million tonnes of new capacity are expected by 2027 most of it in Asia pushing utilization down from roughly 80% in 2021 to near 70% by 2024. Prices and margins have felt the squeeze ever since.

China’s demand is fading as real estate and construction slump, while Western markets are mostly flat. The real momentum is in emerging economies, led by India, where infrastructure and industrial expansion continue to drive consumption. Still, global demand is likely to reach only about 1.8 billion tonnes by 2030, proof that volume growth is slowing worldwide.

Rising exports from China of nearly 120 million tonnes in 2024 have sparked new tariffs and reshaped trade flows. In contrast, India’s market remains balanced, producing roughly 151 million tonnes and consuming nearly the same. Sustaining this equilibrium will depend on smart capacity additions, cost control, and stable policy support.

Sustainability and Environmental Responsibility

Steelmaking remains one of the world’s most carbon-intensive industries, emitting roughly 2.2 tonnes of CO₂ per tonne of steel and accounting for nearly 8% of global greenhouse gases. Because carbon is built into the ironmaking process, decarbonizing steel is complex and can’t rely on electrification alone.

The shift toward cleaner production is underway. Electric-arc furnaces (EAFs) now dominate new capacity, emitting about a third of traditional blast-furnace levels. By 2030, EAFs could represent more than a third of global output. Hydrogen-based DRI and carbon-capture technologies are advancing but remain costly and early-stage.

India’s challenge is steeper. Steel accounts for 10–12% of the country’s emissions, driven by its coal-heavy base. Government initiatives like the Green Hydrogen Mission and upcoming carbon markets are helping early pilots, with green steel demand expected to reach 4–5 million tonnes by 2030.

Steel’s strong recyclability offers a natural advantage, though limited scrap availability, especially in India, could slow the transition. In the long run, sustainability is no longer optional; it's now central to competitiveness and investor confidence.

Technology and Business Trends

Shift to EAFs:

Electric arc furnaces are quickly becoming the industry standard, projected to account for nearly 37% of global output by 2030. Their appeal lies in lower emissions, faster startups, and operational flexibility.

Hydrogen-based DRI:

Green hydrogen DRI is emerging as the long-term decarbonization path. Pilot projects are growing worldwide, including in India, though high production costs limit near-term adoption.

Alternative routes:

Producers are experimenting with biomass fuels, smelting reduction, and carbon capture to lower emissions from existing blast furnaces.

High-value steels:

Rising demand for advanced, high-strength, and specialty steels used in EVs, renewables, and modern infrastructure is driving R&D and product diversification.

Digital transformation:

AI, IoT, and ERP systems are now integral to steelmaking. They enable real-time production control, energy optimization, and cost visibility, helping mills boost efficiency and traceability.

Integrated supply chains:

Vertical integration, joint ventures, and ERP-led supply chain systems are improving raw material control and responsiveness to demand swings.

Evolving business models:

Steelmakers are shifting toward long-term contracts, “steel-as-a-service” offerings, and project-based pricing to strengthen margins and capital efficiency.

Financial Outlook

Revenue Trends:

Global steel revenues are stabilizing after the 2021–22 price surge, with growth expected around 4–5% CAGR through 2030.

Margins:

Profitability has returned to normal levels; most global producers now operate within 5–10% EBITDA margins. Indian mills remain ahead, supported by strong domestic demand.

Balance Sheets:

After deleveraging post-pandemic, most producers maintain healthy liquidity and manageable debt.

Capital Intensity:

Steel remains a capital-heavy business, with 6–7% of annual revenue reinvested in new capacity, modernization, and decarbonization projects.

Cost Discipline:

Energy, raw materials, and utilization rates are key margin drivers. Efficient, automated, high-capacity plants outperform peers on profitability.

Regional Divergence:

Indian producers lead in returns, while Europe and the U.S. face margin compression. Chinese mills continue to prioritize scale over profitability.

Key Risks:

Volatile raw material and energy prices, currency swings, and future carbon costs remain major threats to earnings

Revenue

Revenue Trends:

Globally, the steel market remains massive but mature. Valued at roughly US $1.5 trillion in 2024, it’s expected to edge toward US $1.9 trillion by 2030. Growth will be steady, not spectacular, as prices settle after the last boom and demand shifts from China to faster-growing economies like India.

In India, the picture is much more dynamic. With annual consumption around 150 million tonnes, the domestic steel market generates revenues of ₹12–15 lakh crore (US $150–180 billion). If demand crosses 200 million tonnes by 2030 as expected, total revenues could exceed ₹20 lakh crore, reflecting the country’s expanding infrastructure and manufacturing base.

All revenue estimates are shown in both U.S. dollars and Indian rupees for comparability, using current exchange-rate assumptions.

Capital Expenditure and Investment

  • Global capex intensity: Steel companies typically reinvest ~6–7% of revenue into capital equipment, R&D, and process upgrades, with a growing share directed toward decarbonization technologies such as EAFs, hydrogen plants, and emission controls.
  • India investment scale: To reach 300 MT capacity by 2030, India requires investment of approximately ₹10 lakh crore (US$150+ billion), driven by large brownfield and greenfield projects announced by major producers.
  • Rising capex pressure: Indian steelmakers are operating with high capex-to-sales ratios, often 10–20%, reflecting aggressive capacity expansion and modernization plans
  • Funding mix: Investments are financed through a combination of internal accruals, bank and bond funding, joint ventures, FDI, and government incentives such as the PLI scheme for specialty steel.
  • Outlook and risk:Capex is expected to peak over the next five years, with execution delays and demand timing posing risks if new capacity comes online ahead of market absorption..

Efficiency

Operational efficiency:

Efficiency is the single biggest differentiator in steelmaking. The best plants convert over 70% of iron ore into finished steel, with material efficiency close to 98%, while older or poorly optimized mills lag far behind.

Energy Efficiency:

Energy use tells a similar story. Average energy intensity sits around 19–21 GJ per tonne, but modern electric arc furnaces (EAFs) can operate at nearly half that around 10–12 GJ per tonne making them both cheaper and cleaner.

Capital efficiency:

Capital efficiency depends heavily on how well capacity is utilized. Indian mills typically run at 75–80% utilization, with higher-value steel grades helping improve returns in what is otherwise a capital-heavy industry.

Financial Efficiency:

Financial discipline is equally important. Thin margins mean producers need low leverage, strong cash reserves, and tight control over working capital to survive downturns and protect profitability.

Profitability

Steel profits have come full circle since the post-pandemic highs. After a brief boom in 2021, margins have tightened sharply as prices fell and costs stayed stubbornly high. Global producers are now operating at single-digit or near-breakeven EBITDA margins, with U.S. mills hovering around 2% by late 2024 and several European players slipping into losses.

China’s producers continue to run on razor-thin margins, sustained mostly by state support. India, however, remains an outlier; its mills still manage healthy 15–25% EBITDA margins thanks to strong domestic demand, import protection, and efficient scale.

Steel prices, now 30–40% below mid-2022 peaks, have squeezed revenue per tonne. Rising energy, freight, and raw material costs add further strain. To stay profitable, producers are doubling down on cost control, higher-value steel grades, and disciplined supply management.

Return on equity across most regions has normalized around 10–15%, with strong balance sheets offering some cushion against volatility. In the long run, sustained profitability will hinge on three things: steady demand growth, a richer product mix, and smarter capacity planning, especially in markets like India.

Investment Areas
  • Infrastructure & Mobility: The big story for steel still starts with infrastructure. India’s push on roads, rail, housing, and metro projects keeps the base demand steady. Add in renewable power, EV manufacturing, and defense spending, and you have a mix of sectors that can support real volume growth for years.
  • Green Steel and Decarbonization: Every major producer is now putting money behind cleaner steel. Electric-arc furnaces, hydrogen-based DRI, and renewable power plants are no longer experiments; they're insurance for the future. It’s as much about staying competitive as it is about cutting emissions.
  • Digital and Industry 4.0: Mills are getting smarter. AI-driven monitoring, digital twins, and automated process controls are trimming waste and improving reliability. These aren’t buzzwords anymore, they're fast becoming standard practice.
  • Raw Material Security: Controlling inputs has turned into a survival skill. Companies are picking up captive iron-ore and coal blocks or building their own scrap-recycling chains. It’s a practical way to manage volatility and keep costs predictable.
  • Value-Added and Specialty Steel:The best margins are moving upstream. Automotive, electrical, and construction sectors are hungry for coated and high-strength grades, and producers that can deliver them are seeing steadier returns than those stuck in basic rebar.
  • Geographic Expansion:With domestic capacity rising, Indian steelmakers are quietly eyeing Southeast Asia, the Middle East, and Africa. The goal is simply to follow the demand and spread the risk.
  • Circular Economy and Fintech:The new edge may come from how efficiently a company moves and tracks material. Scrap marketplaces, digital traceability, and supply-chain finance tools are helping mills free up cash and build credibility on sustainability.

Risk Areas

  • Global Oversupply: Too many new plants, not enough demand. China and India are both expanding fast, raising the risk of soft prices and lower utilization.
  • Trade & Policy Shifts: Tariffs, anti-dumping moves, and carbon taxes are redrawing trade routes. The global market feels smaller and more fragmented by the year.
  • Raw Material Swings: Iron ore, coal, and scrap prices move faster than producers can react. For India, coal imports add another layer of risk.
  • ESG & Regulation: Tougher emission norms and green mandates are raising costs. Those slow to invest in clean tech could lose access to key buyers.
  • Demand Cycles:Steel demand still rises and falls with construction and manufacturing. A weak economy can erase profits overnight.
  • Financial Exposure:Debt, currency swings, and volatile prices can hit cash flow quickly—especially for mid-sized or export-heavy mills.

Strategic Imperatives

  • Shift to high-growth, high-value steel: Focus capacity on infrastructure, renewables, EVs, defense, and specialty grades to improve margins and demand stability.
  • Lead the decarbonization transition: Accelerate EAF, DRI, scrap usage, and hydrogen pilots, supported by clear roadmaps and green steel certification.
  • Secure raw materials & energy: Lock in iron ore, coking coal, scrap, and renewable power to reduce cost volatility and supply risk.
  • Drive cost & operational excellence: Improve efficiency through advanced processes, digitalization, ERP-led integration, and logistics optimization.
  • Maintain policy and market agility:Build flexible portfolios, pursue selective diversification, and engage closely with policymakers to manage trade, ESG, and demand cycles.

Key Takeaways

  • Global steel is slowing: Growth is maturing worldwide, with China declining and incremental demand concentrated in India and emerging markets toward ~2 Bt by 2030.
  • India drives the future: India is the primary growth engine, targeting ~300 MT capacity by 2030, backed by strong domestic demand and large-scale investment.
  • Decarbonization is decisive: EAFs, hydrogen DRI, and scrap recycling are no longer optional but central to competitiveness and policy alignment.
  • Technology and efficiency win: Industry 4.0, clean production routes, and value-added steel will define productivity and margins.
  • Discipline amid risk: Oversupply, trade barriers, and raw-material volatility mean success depends on efficiency, capital discipline, and policy alignment.